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Rent guarantee insurance

Find out how your rental income could still be covered if your tenants don’t pay, with rent guarantee insurance.

goco author
Updated 26 August 2021  | 2 min read

What’s rent guarantee insurance?

Rent guarantee is a part of landlord insurance that you often have to pay for as an optional extra.

It covers the money you’d usually get from a property you rent out if your tenants don’t pay.

Key points

  • Rent guarantee cover can be bought as an add-on to your landlord insurance
  • It’ll cover you for costs when your tenant is still in the property but not paying rent
  • There’s usually a cap on the monthly rent it’ll cover, as well as how many months it’ll pay out for

What does rent guarantee insurance cover?

Rent guarantee cover is usually capped, for example up to £2,500 a month, and is only paid for a limited time set out in the policy, usually of between six and 12 months.

Terms vary from one policy to another, but you can usually claim when tenants have fallen into a month’s worth of arrears, you’ve tried mediation and want to start the process of evicting your tenants for non-payment.

Your insurance will pay the unpaid rent until you've regained vacant possession of your property, up to the time limits of your policy.

As well as covering you for lost rent, some policies will cover you for legal legal costs incurred in the eviction process or if you are involved in any other disputes with your tenants.

Some policies will also pay out a proportion of your rental income for a few months after you’ve evicted tenants and are looking for new ones.

What isn’t covered by rent guarantee insurance?

Exclusions will vary between policies but rent guarantee insurance usually won’t cover:

  • Claims that are made within 90 days of taking out a policy
  • Claims made against tenants who have had rent arrears in the past

Is loss of rent insurance compulsory?

No, it’s up to you whether you decide to take it out.

But it can be a real safety net, especially if you rely on your rental income to cover the cost of the mortgage on the property you’re renting out.

What do I need to get rent guarantee insurance?

For a policy to be valid, your tenants will need to have passed the necessary reference process.

You’ll need them to:

  • Get proof of ID (one of which must be photographic)
  • Ask for confirmation of employment and earnings
  • Run an affordability check and a credit check ensuring that the tenant is clear of CCJS and bankruptcies

If tenants fail the referencing requirements, they must have a guarantor who has passed the process for a policy to be valid.

Is there an excess on rent insurance?

Some policies have no excess while for others it could be as much as a month’s rent.

Is there a limit to how much loss of rent I can claim?

Policies will have a cap on how much you can claim and for how long.

In general, you can claim a maximum £2,500 per month (even if what you charge is more than that) for a timescale of between six to 12 months, or until you regain possession of your property (whichever is sooner).

Can I cover more than one property?

A policy covers only one property. If you want cover for more than one property you’ll need to take out a separate policy for each.

Can I claim if the tenant has left the property?

No, this type of insurance is only designed to cover you if your tenants stop paying rent but remain in the property.

It’s there to help you evict the tenant and cover the unpaid rent in the process.

Can I buy a policy if my tenants are already in arrears?

If your tenant is already in arrears, you can’t take out a new rent guarantee insurance policy.

Do I need a new policy if I have new tenants?

The policy is based on the property, so will cover new tenants as long as they have passed all the referencing checks.

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